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Pandemic relapse spells trouble for India's middle class

In March 2020, a strict nationwide lockdown to fight the coronavirus pandemic froze economic action overnight. Babu's business collapsed, and then he drove his family back to their village.

"Since March last year, we have not earned a single rupee," he said. "All my three buses have been standing still for at least a year. We are completely broken"

India's economy was on the cusp of recovery in the first pandemic shock every time a new wave of infections spanned the country, infecting millions, killing hundreds of thousands and forcing many people to stay home. Cases are now slough off, but prospects for many Indians are radically worse as midsize jobs evaporate, volatility shrink and inequality is rising.

Decades of progress in alleviating poverty are imperiled, specialists say, and receiving growth back on course hinges on the destiny of the nation's sprawling middle course. It is a powerful and diverse group which range from salaried workers to small business owners like Babu: many millions of people struggling to hold onto their hard-earned gains.

The outbreak of the pandemic triggered the worst recession since the Great Depression of the 1930s and as it slowly ebbs, many economies are bouncing back. The World Bank foresees 5.6% worldwide growth for 2021, the best since 1973.

India's market contracted 7.3% in the fiscal year which ended in March, worsening by a slump that slashed growth to 4 percent from 8% in both years before the pandemic struck. Economists fear there'll not be a rebound similar to the ones found from the U.S. and other significant economies.

"Coronavirus has been the latest in a series of blows to hit India's economy in the last couple of decades," said Mahesh Vyas, chief executive at the middle for Monitoring the Indian Economy (CMIE). "But the consequences brought on by the virus also have had a very debilitating effect on the market and I fear it is going to be lasting."

The market was among the quickest rising when Prime Minister Narendra Modi abruptly hauled most of India's currency from circulation in 2016, targeting corruption. A significant tax reform whose kinks are still being ironed out followed. Modi's flagship Make in India program to energize manufacturing has floundered and unemployment has surged.

The poor are suffering the most from the pandemic. However, this is the first time in several decades which India's middle class has taken such a big hit,'' said Vyas.

After 40 decades of hard work, tour firm owner Babu was taking home about $2,000 a month. Business was going well that he took out a loan to buy his third excursion bus.

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